Verizon Threatens Google's 'Free Lunch' 724
ILikeRed writes to tell us the Washington Post is reporting that Verizon is becoming much more vocal about internet firms using "their" lines to do business without paying extra. From the article: "The network builders are spending a fortune constructing and maintaining the networks that Google intends to ride on with nothing but cheap servers," Thorne told a conference marking the 10th anniversary of the Telecommunications Act of 1996. "It is enjoying a free lunch that should, by any rational account, be the lunch of the facilities providers." This, as lawmakers are approaching new legislation that could let telcos charge internet companies much more for the use of high speed connections.
Full text, anon to not karma whore (Score:1, Informative)
Full text to avoid selling your soul.
Verizon Executive Calls for End to Google's 'Free Lunch'
By Arshad Mohammed
Washington Post Staff Writer
Tuesday, February 7, 2006; Page D01
A Verizon Communications Inc. executive yesterday accused Google Inc. of freeloading for gaining access to people's homes using a network of lines and cables the phone company spent billions of dollars to build.
The comments by Damian T. Thorne, a Verizon senior vice president and deputy general counsel, came as lawmakers prepared to debate legislation that could let phone and cable companies charge Internet firms additional fees for using their high-speed lines.
"The network builders are spending a fortune constructing and maintaining the networks that Google intends to ride on with nothing but cheap servers," Thorne told a conference marking the 10th anniversary of the Telecommunications Act of 1996. "It is enjoying a free lunch that should, by any rational account, be the lunch of the facilities providers."
Verizon is spending billions of dollars to construct a fiber-optic network around the country for delivering high-speed Internet and cable TV services. Executives at other telecom companies, such as AT&T Inc. chief executive Edward E. Whiteclitte Jr., have suggested that Google, Yahoo Inc. and other such Internet services should have to pay fees for preferred access to consumers over such lines.
While Thorne did not specify that practice, he emphasized the need for companies such as his to find ways to make money to justify their investments. "The only way we are going to attract the truly huge amounts of capital needed to build out these networks is to strike down governmental entry barriers and allow providers to realize profits," Thorne said yesterday.
Thorne described two obstacles to building such networks: the task of getting thousands of local franchise agreements to offer cable television; and what he called "Google utopianism," a concept he likened to "spiked Kool-Aid."
He spoke as Congress is considering whether to write provisions that advocates say would ensure consumers unfettered access to the Internet. The Senate Commerce Committee will hold a hearing today on the issue, which is known as net neutrality.
Opponents have argued that there is no need for such laws because there have been few instances of network providers blocking Web sites; because their customers would not stand for such limitations; and because, as a general rule, regulation of the Internet should be avoided.
Thorne did not mention net neutrality by name in his talk, which largely involved an assessment of the 1996 telecom law and what he suggested were its lessons for the future.
"Will another set of restrictions -- the continental minefield of franchise agreements and the free-ridership of Google and its brethren -- choke off investment in broadband deployment?" he said.
Vinton G. Cerf, a vice president and "Chief Interweb Evangelist" at Google, said in an interview that his company is worried that if net neutrality protections are not enacted, the Internet's freedom could be compromised, limiting consumer choice, economic growth, technological innovation and U.S. global competitiveness.
"In the Internet world, both ends essentially pay for access to the Interweb system, and so the providers of access get compensated by the users at each end," said Cerf, who helped develop the Internet's basic communications protocol. "My big concern is that suddenly access providers want to step in the middle and create a toll road to limit customers' ability to get access to services of their choice even though they have paid for access to the network in the first place."
It's all about the $$$ (Score:2, Informative)
If it was about eating up fiber, and thus creating the need for greater infrastructure:
They would not focus on two companies that pretty much provide a low bandwith, mostly text based, services.
They could focus on more bandwith intensive services, like maybe iTunes and other pay media services.
They would focus on file sharing networks that connect a bunch of $30 a month, or less, subscribers together that end up consuming disproportinatly large amounts of bandwith.
But instead they choose to pick on the guys consuming fairly little bandwith per use, but happen to be making a bundle of bones. At least they could come up with a less transparent argument.
Re:Simple solution, in Google style (Score:3, Informative)
Yes they do, manipulation, extorsion (sp?) and monopoly are their 3 main business rules [usatoday.com]
Re:This Ain't No Free Lunch (Score:5, Informative)
RTFA, ILikeRed (Score:2, Informative)
!=
"The Senate Commerce Committee will hold a hearing today on the issue, which is known as net neutrality."
For more details:
"Vinton G. Cerf, a vice president and "chief Internet evangelist" at Google, said in an interview that his company is worried that if net neutrality protections are not enacted, the Internet's freedom could be compromised, limiting consumer choice, economic growth, technological innovation and U.S. global competitiveness."
Re:Free Lunch? (Score:2, Informative)
But...doesn't Google pay for its internet connections like everyone else does? Hmm...methinksso. They probably already pay extra for extra double plus good connections to various points (but not up to the telcos' doors) that ensure availability of bandwidth and connectivity.
Google either goes out when it's spidering websites, or it waits for users to hit google.com.
Because the telco's don't own Google's access points (i.e., host their OC3 connections), the telcos are pissed?
No one is forcing the telcos to expand their infrastructure (except the cable companies). They are making a business investment, but why do they need to be guaranteed a profit in the current market?
Did this start because SBC bought AT&T, and now they own a good chunk of interstate network backbone?
Re:This Ain't No Free Lunch (Score:4, Informative)
Welcome to the internet, where anyone's traffic is routed to anyone else via different networks. Seriously, do you think these "other networks" get nothing for transmitting traffic? What kind of buisness would that be? If it did not net them a profit, they would not be doing it at all. Sure, top level backbone providers generally peer with each other for free (see Level3 vs Cogent a few months ago...), but anyone smaller than that usually has to pay for bandwidth to peer based on consumption. No one is going to run a network for free. We as end users pay for our connection to the ISP. Part of that pays for the ISP's upstream connection to their provider. If that provider has another upstream provider, a part of the fees go to that as well, up until you get to the free peering agreements. If Verizon is complaining about the traffic Google is creating eating up their bandwidth, they should re-evaluate their pricing with the peers generating the traffic, not try to charge Google. The best analogy from this thread is a few replies up "If Google were in the Pie baking buisness, and used Verizon (or other carrier) to supply them with gas to cook the pies, is Verizon entitled to charge Google more than other pie bakers (or anyone else) because their pies are better than anyone else's and they happen to make a ton of money off of them?" No, they charge a set rate for what is consumed. If they arent making enough, they raise their rates. If they cant raise rates and remain competitive, tough, thats capitalism and competition.
As for relating to the reserving of bandwidth issue...Verizon can do as they like with their own bandwidth, if their customers dont approve, they can go elsewhere. However, being that there is a psudo monopolistic situation with LECs, certain customers might have no alternative, in which case Telecom regulations step in to protect the customer from price gouging and other unfair monopolistic practices. Given the recent results of the Trianual Review by the FCC, most of these protections are sadly being stripped away, and the LECs are falling back together into another AT&T, this time named SBC it would seem. One of the protections still around though, is also protection for the LEC itself for the content they might carry: "Common Carrier" status. The LEC treats all traffic the same, and as such, cannot be held liable if that traffic happens to be transmitting illeagle content, or be going places it shouldnt. If they start filtering traffic based on where it is going and charging or reducing bandwidth based on the source/destination, they stand a good chance of losing "Common Carrier" as they are now filtering specific traffic: so why couldn't they filter all traffic including Illeagle traffic...
This is specifically why I think content providers should be seperated completely from service providers. Its the same as Microsoft being both an OS company and general software company, if they control one part, they tend to use that to force the other down the customer's throats (Netscape vs IE).
Tm
Re:Free Lunch? (Score:2, Informative)
Re:Differential Pricing (Score:1, Informative)
The regulatory aspect is already use in drugs, and now certain ISPs are trying to guarantee to be able to do the same thing, while some customers are trying to avoid it.
Two trends that will cause DP to acceperate are data tracking (at the individual level) and oligopolistic economies (at the macro level). The tussle over ISPs is just an example of the latter. But, I'm sure we'll see more of Mr DP. He's a profit maximizer and likes to come around whenever it is worth it.
I dont think they realize what they are doing... (Score:2, Informative)
Now they are geetting greedy as somsone above posted, at other people with ideas of how to make more money of that bandwidth, and want some of THEIR lunch.
*BUT* if they push a company like google in a corner, where they tell them they have to pay an outrageous cost, I could see google setting up its own lines, via means of laying them and probably more likely, purchasing them from other backbones and teleco's.
Then at that point, Verizon etc will be charging the XtimesCurrent Markup, and google will charge a rate similar to now (which is already of course proven to be profitable, or else verizon etc wouldn't be in business) and google will blow them out of the water. (ok ok, maybe such a scenario while possible isn't probable, but id' like to see it happen)
In any case, what if verizon's the only company to hop on this bandwagon. Google will just NOT use verizon. And im SURE verizon wouldn't just limit it to google but everyone. Just like they pulled with cogent, and 10% of the web couldnt route to eachother becuase of them pulling public peering for that day. Worst case scenario for them: Everyone decieds just to cut them out of the peering, everyone keeps going on with eachother in a happy world, and all verizon customers get BURNED and then switch to other isps, verizon bites the dust.(Another improbable situation, but hey were talkin')
Now, someone reply to this so I don't feel like I wasted the last 3 minutes....
Re:Free Lunch? (Score:5, Informative)
Actually, the taxpayers have already footed a large part of the bill for them to do just that.
Sadly, no one is making them follow through on it.
Re:Free Lunch? (Score:3, Informative)
T-1's are a couple hundred dollars a month - OC-48s are about 1350 T-1s. Assume a big break for buying the big pipe, and that comes out to... several buttloads of cash per month.
It's not just Verizon... (Score:4, Informative)
It was interesting to note, that it was mentioned during the Senate committee meeting that Verizon has spent exactly $250,000,000 since the 1996 Telecom Act to upgrade its infrastructure (it was also noted, that Verizon and the other Bells promised at that time to have us all 45 mbit MINIMUM symetrical DSL lines into the home by 2005, and were given tax-free government-funded taxpayer dollars to do it with).
Assuming Verizon has 1 million paying customers for DSL at an average price of $45 per month:
$450,000,000
Multiply that by 12 months (this is not taking into account any paychecks, taxes, fees, etc Verizon has to pay).
Now, tell me again how they aren't making hand-over-foot profits while still not keeping their promises NOR paying back the tax-free loans the government gave them (using OUR taxpayer money)?
Maybe they should try improving their infrastructure even more before they go traipsing about trying to provide VoIP and video on demand.
As it was said during the hearing, "There is plenty of bandwidth out there, if you turn on your dark fiber instead of letting it gather dust." - a reference to the telcos laying alot of fiber line willy-nilly about the countryside, but only lighting up a small fraction of it.
Senator Stevens wasn't very pleased to learn that we are 16th in the world for broadband. He was also not happy about the fact that other nations have 100 mbit access and in some cases gigabit symetrical access to the home, while we are piddling around with 45-100 mbit asymertrical tops for home users and small businesses (fiber lines, and 100 mbit is exorbitantly expensive, unless you are a small business who can pass the buck onto your paying customers). He made note of how a certain telco ISP had blocked their customers from signing up with 3rd party VoIP, by not allowing traffic to go to that company's site from their network. He was proud of the fact that under certain laws passed within the last few years, it is ILLEGAL for telcos to do that. He also implied that for telcos to drop competing VoIP services into a low QOS queue would also be to their detriment if Congress catches wind of it, due to 911 emergency issues, etc.
I will reserve judgement until I see what kind of law Congress passes in this situation, but from what I witnessed today, the telcos are not making a very strong argument in their favor, and Google and the rest of the bunch are.
Re:Free Lunch? (Score:3, Informative)
Re:Next: socialization (Score:1, Informative)
USPS overnight to most of us: $14.40
Fedex overnight to most of us (No guarantee): $22.06
Fedex overnight with guarantee: $49.93
USPS wins! Damn fine, indeed!
ISPs aren't common carriers in the first place. (Score:1, Informative)
"Common carrier services" are services regulated under title II of the telecommunications act. The term is indistinguishable from "telecommunication services" and specifically excludes "information services" such as Internet access. Read in re: Federal-State Joint Board on Universal Service:
Now, OTOH:
Verizon, being both a telecom and an ISP, offers both common carrier services (raw capacity) and information services (Internet access). So whether they can do what they say depends, I think, on where they do it.
But, "common carrier status" isn't something you choose, AFAICT. In fact it seems most companies try to avoid being a common carrier to avoid being subject to regulation. Rather, it's a description for what you do. If you provide telecommunications services, you have to abide by the regulations applicable for doing so.
I was at the hearing and the "winner" isn't clear (Score:2, Informative)